On Wednesday, digital payments firm Paytm announced that it will be charging a 2 percent deposit fee from users who top up their Paytm Wallet using credit cards. The move was not popular with users though, and late Thursday night, it rolled back the charge, "keeping users' convenience in mind."
As noted in the post announcing the 2 percent charge, since November, Paytm has been allowing users to take cash out of the wallet to their bank accounts at no charge. Typically, cashing out has attracted a fee from wallets. At the same time, Paytm and other wallets haven't charged fees for depositing cash into their systems. This meant that credit card users could fill up their Paytm wallets using the card, then transfer that money back to their bank accounts, at no charge. "They were not only getting free loyalty points which effectively is free cash but also getting access to free credit," Paytm noted.
For "genuine" users, Paytm was offering cashback coupons which could only be spent via Paytm, and these came with a large number of caveats, which looked fairly cumbersome. Paytm noted this, and when it announced the rollback of the 2 percent charge after just a day, it stated: "At the same time, we are conscious that this move caused inconvenience to a large segment of our users, including those who are using their credit card for genuine transactions."
"Keeping the millions of customers and merchants interest as utmost priority, we have decided to suspend the 2 percent fees and will continue to build a series of features to curb such misuse," Paytm added.
As of now, Paytm has not stated what it will be doing to prevent further misuse.
Disclosure: Paytm's parent company One97 is an investor in Gadgets 360.